' The first application No, 2530/81 has been filed by defendant No, I under section 21 read with section 151, C. P. C. Praying that the Court has no jurisdiction against the defendant No, L The main ground is that it is a foreign banking company having no branch office in Pakistan and as the cause of action against the defendant No, I did not arise within the jurisdiction of this Court it has no jurisdiction to try the suit. The second application No, C. M. A. 2531/81 has been filed on behalf of defendants Nos. 1 and 2 praying that as the suit is barred under sections 21, 42 and 56 of the Specific Relief Act the plaint should be rejected.
' Before dealing with these applications I will state the facts briefly. Under an agreement between plaintiff and defendant No, 1 the plaintiff agreed to supply sugar to the defendant No, 3 at Karachi.
The plaintiff was to furnish a performance bond for due performacce of the contract, in the shape of an unconditional guarantee which could be encashed by the defendant No, 3 on demand without recourse or reference to the plaintiff. On 19th August, 1980, the defendant No, 2 which is a foreign company having its branch office at Karachi at the instructions and on behalf of the defendant No, 1, issued a performance bond in favour of defendant No, 3 in respect of contract dated 7th August, 1980. The performance bond was amended from time to time up to 26th August, 1980 when changes were made with regard to the operatibility of performance bond, opening, transfer and divisibility of the letter of credit. According to plaintiff the performance bond was submitted on the condition that the Defendant No, 3 will open a letter of cerdit within 48 hours of furnishing the performance bond. The defendant No, 3 however confirmed letter of credit on 2nd September, 1980, and thus committed breach of contract. The plaintiffs however, could not perform their part of the contract and was agitating the matter before the Federal Government alleging breach of contract by the defendant No, 3, In spite of the fact that the defendants were aware of these facts the defendant No, 3 resorted to encash the performance bond and called upon the defendat No, 1 to pay the amount. The defendant No, 1 instructed defendant No, 2 to pay Rs, 47,49,048.89 who .Prepared a pay order and issued it to the defendant No, 3 but it could not be encashed due to order of status quo passed by the Civil Judge in suit No, 4730/80 filed by the plaintiff. It has further been alleged that the defendant No, I has debited the plaintiff's account and has demanded from the plaintiff the amount equivalent to the amount of performance bond paid it with penal interest. The defendant No, 1 has also threatened to take legal action against the plaintiff. The plaintiff's contention in the plaint is that as the defendant No, 3 had failed to open letter of credit in terms of agreement, it cannot make a valid demand nor can the defendants Nos.
1 and 2 are liable to pay to the defendant No, 3.
' After protracted proceedings involving transfer application made by the plaintiff and the revision filed against the order passed by the District Judge the plaint was returned as the Court held that it had no pecuniary jurisdiction to try it. This plaint was presented in this Court and after hearing the parties the Court, as an interim measure by its order dated 4th June, 1981, directed the defendants Nos. 1 and 2 to deposit Rs, 47,79,048.89 in Court and the defendant No, 3 was also directed to deposit the pay order. Both these directions have been complied with by the parties.
' The plaintiff, as is obvious from the lengthy prayer made in the plaint, has prayed for a declaratory decree that the performance Bond is of no legal effect and that on account of breach committed by defendant No, 3, having failed to open letter of credit within 48 hours of furnishing of the performance bond, the same cannot be encashed by defendant No, 3 and no payment can be made by defendants Nos. 1 and 2 under the said performance Bond. A permanent injunction has also been sought against defendants Nos. 1 and 2 from demanding or claiming or recovering an amount equal to the amount of the performance bond from the plaintiff or their sureties or their local agents and further that the defendants Nos. 1 and 2 may be restrained from making payment to defendant No,
3. The plaintiff in short have sought declaration in respect of a contract whereby a certain ascertained amount has been claimed by one of the defendants. The plaintiff seeks declaration that performance Bond has become inoperative illegal and, therefore, the plaintiffs cannot be held liable to pay any amount. Under section 42 of the Specific Relief Act any person entitled to any legal character or to any right as to any property may filed suit for declaration against a person denying or interested to deny his right or title to such character. A declaration cannot be sought on the execuibility or validity of a contratct as it does not in any manner refer to the legal status of a person. Almost on similar facts this question cam up for consideration in the case of Ali Sons Ltd. v. Government of East Pakistan (1) and after considering several authorities Noorul Arfin, J. Made the following observations :- "A further objection to the maintainability of the suit is that the declaration sought by the plaintiffs is neither with respect to the plaintiffs' legal character, nor with regard to any right property. Under section 42 of the Specific Relief Act, 1877 it is only with regard to these matters that a person can come to the Court for
(1) PLD 1968 Kar. 222 ' declaratory relief. The phrase "legal character" has been used, as held in K. P. Ramakrishna Patter v. K. P. Narayana Patter and others (1), in the sewse of "status", which is constituted by the attributes which the law attaches to a person in his individual and personal capacity and which, according to Holland, is referable to such legal conditions as (1) sex, (2) minority, (3) "patria potetas' and 'mantis',
(4) co-overture, (5) celibacy, (6) mental defect, (7) bodily defect, (8) rank, caste and official position, (9) slavery, (10) profession, (11) civil death, (12) illegitimacy, (13) heresy, (14) foreign nationality, and (15) hostile nationality. According to Salmond, the terms "status" is usually confined to personal legal condition or, personal capacities and incapacities, or compulsory as opposed to conventional personal conditions. In this sense, the expression will include personal rights and burdens to the exclusion of the proprietary relations, contractual capacities and incapacities, or legal conditions imposed upon a person by law without his own consent as opposed to the condition which he has acquired himself by agreement, such as the position of a slave. A declaration that the plaintiff has not committed breach of the terms of a contract is a declaration neither with regard to any legal character, nor any right to or in any property. This point is now conclusively settled by the decision of the Supreme Court in M. A. Nasir v. Chairman, Pakistan Eastern Railways and others (2), from which I would, with respect, reproduce the following observation of Fazle-Akbar, J. :- "In the suit there was also a prayer for a declaration under section 42 of the Specific Relief Act that the contract in question was still subsisting. The learned counsel has not pressed this point before us. Under the provisions of section 42 of the Specific Relief Act a person entitled to any legal character or to "any right to property' can institute a suit for a declaratory relief in respect of his title to such legal character or right to property. It will, therefore, suffice to say that section 42 "does not contemplate a suit like the present one.
' This pronouncement should effectively dispose of doubts, if any with regard to the maintainability of the present suit, which I hold acccordingly to be misconceived and incompetent. Then plaintiffs remedy could have been either a suit for rescission of the contract, or for specific performance if so permitted, or for damages for its breach but none of these courses have been pursued by the plaintiffs."
In the present case also the plaintiff is seeking declaration that it has not, committed breach of the terms of contract and further that the defendant No, 3 have committed breach and, therefore, they are not entitled to encash the performance bond. Such a declaration in view of the afore-stated observation cannot be granted.
' The plaintiff's second prayer is for grant of permanent injunction against the defendants particularly against defendant No, 1 from making any payment to the defendant No,
3. Mr. Mamnoonul Hassan and Mr. Mansoorul Arfin, the learned counsel for the defendants have contended
(1) I L R 39 Mad. 8Q (2) PL D 1965 SC 83 ' that a permanent injunction for breach of contract where compensation is adequate remedy cannot be granted. They have relied on sections 54 (b) (c) and 56 (f) ( j) of the Specific Relief Act.
These provisions of law do not contemplate grant of permanent injunction where the invasion to plaintiff's right or enjoyment of property is such that pecuniary compensation could afford adequate relief. If compensation is not an adequate relief or where it is probable that pecuniary compensation cannot be got for the invasion the injunction may be granted. The point was also subject-matter of consideration in the case of Alvi Sons Ltd. Quoted above and the relvant observation is as follows :- "The relief sought by the plaintiffs could, at the most, be brought under the first part of section 54, under which an injunction to prevent breach of an obligation would be granted by the Court. The problem, therefore, resolves itself into the question, does defendant No, 3 owe any obligation to the plaintiffs? The plaintiffs were unable to precisely formulate the obligation owed to them by the defendants. They would, however, say that the defendant is under obligation not to misuse the plaintiff's deposits by appropriating the same to the guarantee given to the Government, or making payment of the guarantee, or by retaining it wrongfully as security. But it is not claimed that the plaintiffs have any deposits with defendant. No, 3, the misuse whereof would constitute breach of a banker's obligation to his customer. If the surety has applied its own funds to the discharge of the guarantee, the question then would be whether the payment has been made rightly or wrongly. Under section 145 of the Contract Act, the surety can claim indemnity from the principal debtor oily for moneys rightfully paid by the surety under the guarantee, and not for any moneys which he has paid wrongfully. Wrongful payment is not a legal injury, and consequently cannot constitute breach of as obligation, because if payment has been made wrongfully, the surety would be unable to claim indemnity from the principal debtor. Thus accepting the plaintiffs' case that the proposed payment of the guarantee by the defendant No, 3, would be wrongful, as the plaintiffs have not committed breach of contract, this would not give any cause of action to the plaintiffs, for the defendant No,
3. Would have no legal claim for indemnity on the plaintiffs for payments which are made wrongfully. Wrongful payment would not be a payment under the guarantee at all, and would be a nullity as regards the principal debtor, who would have sample opportunity to protect himself against such payment if the surety brings a suit against him for indemnity. Such a suit would be an efficacious relief 'or the plaintiffs, and the existence of this relief presents a bar to the claim for injunction by reason of the provisions of section 56 (1) of the Specific Relief Act.
' In the present case the plaintiff has alleged that the defendant No, 1 has demanded the amount which it had instructed the defendant No, 2, to pay the defendant No,
3. In support of this allegation the plaintiff has filed two letters of defendant No, 1, dated 18th December. 1980 and 22nd January, 1981 (Annexures G mid G-1, the plaint). By these letters the defendant No, 1 has informed the plaintiff that as payment of U. S. $, 4,85,730 has been made under the performance band, the plaintiffs account was overdrawn to the extent of U. S. $ 4,85,610.00, which the plaintiff was called upon to pay otherwise proper action shall be taken. The facts as stated in the plaint clearly establish that the plaintiff's account with the defendant No, 1, is overdrawn and there is no amount left for adjustment. The plaintiff has not given any detail of the sureties against whom any action is being taken by the defendant No,
1. In the circumstances following the authoritative observation in Alvi Sons Ltd. I am of the opinion that the suit as framed is not maintainable and the plaint is, therefore, rejected.
' In view of the aforestated order it is not necessary to deal with the other application. However, suffice it to say that the admitted position is that the performance bond was executed at Karachi at the instruction of the defendent No,
1. Tae defendant No 2 carries on business at Karachi and on the instructions of his principal had executed the Performance Bond and the payment was to be made at Karachi, where the goods were also to be supplied. The defendant No, 1 has also admitted that part of the cause of action arose at Karachi. Mr. Hussain the learned counsel for the plaintiff pointed out that first the suit was filed before the Civil Judge but the defendant No, 1 did not object to the jurisdiction of the Court. In fact it submitted to the jurisdiction of the Court and contested the matter and this is for the first time that the defendant No, 1 is challenging the jurisdiction of this Court. It has further been pointed out that in its letter dated 18th December, 1980, the defendant No, 1 ha admitted the defendant No, 2 as its Karachi Branch. In the facts and circumstances stated above, I am not inclined to hold that the Court has no jurisdiction to try the suit.Miscellaneous Application No, 2530/81 is, therefore, dismissed.